Abstract: Based on China’s 230 above prefecture-level cities, 2363 listed companies and 16,566 observation values during the period of 2008 to 2016, this paper adopts the triple difference method to conduct a test. The findings show that the establishment of innovative cities has promoted the adjustment of the innovation output of the local high-tech enterprises towards substantive innovation. This effect has certain regional heterogeneity, which is more significant in the regions with relatively weaker marketization. The fiscal policy and the financial guidance policy are two important tools for local governments to play the role of policy in the early days of innovative urban construction. Through increasing the development-type financial subsidies in the government subsidies and with the support of social security funds, the improvement of substantive innovation is realized. The research conclusions can provide empirical evidences for the government’s“promising hand”to play an active role in promoting regional and corporate innovation output, especially in regions where the“invisible hand”of the market is relatively weaker.

Key words: innovative cities; innovation output; substantive innovation; financial subsidy; social security fund